Gas stations offer discounts for cash instead of credit cards

— -- This year, as gas prices surged, Richard Bell mounted a sign in the station he owns: "Attention gas cash customers: FREE 16 oz. fountain drink or 12 oz. coffee with purchase of 10 gallons of gas or more."

The goal, says Bell, owner of the Market at Jodeco, in Stockbridge, Ga., was to encourage customers to pay with cash rather than a credit card. But so far, he notes ruefully, it's been a struggle. As gas prices climb ever higher, more — not fewer — consumers are using credit cards, because they don't have enough cash on hand.

The offer "doesn't help that much," Bell says. "We have only a few people take us up on it."

Despite such resistance, a growing number of gas stations across the nation are launching promotions to encourage drivers to choose cash over credit. They're doing so because as gas prices rise, so do credit card fees, thereby cutting into the stations' already slim profit margins.

"In our industry," says Kent Couch, owner of two Stop and Go mini-marts in Oregon, "we operate off a few cents per gallon profit. It's always been that way."

Jeff Lenard, a spokesman for the National Association of Convenience Stores, says the promotions are a "sign of the desperation that retailers feel about their business."

Gas station owners pay processing fees for both debit card and credit card purchases. But fees for debit card transactions — especially when consumers enter a PIN for the purchase — are usually significantly lower than credit card transactions.

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In Irvine, Calif., roughly 100 gas station owners and retailers rallied last week, holding signs with such messages as: "Wake Up Congress. Stop Hidden Credit Card Fees on Gas."

"In many cases, credit card fees are one of the largest expenses businesses have," says Mitch Goldstone, a retailer who organized the rally.

Sharon Gamsin, a spokeswoman for MasterCard, contends that retailers are paying higher credit card fees because of higher oil prices, despite moves by MasterCard and Visa to lower card fees at the pump. Such fees, Gamsin adds, are "only one small piece in the chain of gasoline pricing."